Japan's financial watchdog estimates that negative interest rates under the BOJ's monetary easing policy will reduce profits for the country's three big banks - Mitsubishi UFJ Financial (NYSE:MTU) , Sumitomo Mitsui (NYSE:SMFG) and Mizuho Financial (NYSE:MFG) - by at least $3B for the year through March 2017, the Nikkei reports.

The BOJ implemented negative interest rates in February in a bid to boost the economy, under which it charges banks for parking some of their excess reserves at the central bank.

The lenders were also informed today whether their capital return plans would put them below the Fed's 5% threshold, giving them a 6-day window with which to change those requests, if need be. Last year, both BofA and Goldman scaled back their dividend/buyback requests, allowing them to pass the CCAR. This year's CCAR results will be announced on Wednesday.

As banks weigh in their bids for Citigroup's (NYSE:C) Japanese retail banking operations, the U.S. bank announced that it was looking to sell its Japanese Diners Club card business along with the unit.

Citigroup's Japanese retail business has some 3.6T yen ($33.6B) in deposits, of which almost 2T yen is dollar-denominated, attracting Japanese banks seeking foreign currencies.

Citibank Japan had net income of $12.9M last year - that's less than the total compensation of CEO Michael Corbat, and it helps explain why C has reportedly put the unit on the block.

“It is very difficult to make money from lending in Japan unless you’re in higher-margin consumer lending or if you’ve got a very large scale of operations like the megabanks have,” says analyst David Marshall. “In an environment in which interest rates are very low and investors are still somewhat risk adverse despite economics, it is hard to make money.”

Among the possible buyers are Shinsei Bank and Mitsubishi UJF (NYSE:MTU), according to the Nikkei.